PO YENG CHEO vs.

LIM KA YAM
Facts:
The plaintiff, Po Yeng Cheo, is the sole heir of one Po Gui Yao, deceased, and as such Po
Yeng Cheo inherited the interest left by Po Gui Yao in a business conducted in Manila
under the style of Kwong Cheong Tay. This business had been in existence in Manila for
many years prior to 1903, as a mercantile partnership, engaged in the import and export
trade; and after the death of Po Gui Yao the following seven persons were interested
therein as partners in the amounts set opposite their respective names, to wit: Po Yeng
Cheo, Chua Chi Yek, Lim Ka Yam, Lee Kom Chuen, Ley Wing Kwong, Chan Liong Chao, Lee
Ho Yuen. The manager of Kwong Cheong Tay, for many years prior of its complete
cessation from business in 1910, was Lim Ka Yam, the original defendant herein.
Among the properties pertaining to Kwong Cheong Tay and consisting part of its assets
were ten shares of a total par value of P10,000 in an enterprise conducted under the
name of Yut Siong Chyip Konski and certain shares to the among of P1,000 in the Manila
Electric Railroad and Light Company, of Manila.
In the year 1910 Kwong Cheong Tay ceased to do business, owing principally to the fact
that the plaintiff ceased at that time to transmit merchandise from Hongkong, where he
then resided. Lim Ka Yam appears at no time to have submitted to the partners any
formal liquidation of the business, though
The trial judge rendered judgment in favor of the plaintiff, Po Yeng Cheo, to recover of the
defendant Lim Yock Tock, as administrator of Lim Ka Yam, the sum of sixty thousand pesos
(P60,000), constituting the interest of the plaintiff in the capital of Kwong Cheong Tay,
plus the plaintiff's proportional interest in shares of the Yut Siong Chyip Konski and Manila
Electric Railroad and Light Company, estimated at P11,000, together with the costs. From
this judgment the defendant appealed.
Issue:
Whether or not the award given to Po Yeng Cheo constituting his interest to the extent of
his share of the capital of Kwong Cheong Tay was proper.
Held:
No.
It was erroneous in any event to give judgment in favor of the plaintiff to the extent of his
share of the capital of Kwong Cheong Tay. The managing partner of a mercantile
enterprise is not a debtor to the shareholders for the capital embarked by them in the
business; and he can only be made liable for the capital when, upon liquidation of the
business, there are found to be assets in his hands applicable to capital account.
The only property pertaining to Kwong Cheong Tay at the time this action was brought
consisted of shares in the two concerns already mentioned of the total par value of
P11,000. Of course, if these shares had been sold and converted into money, the
proceeds, if not needed to pay debts, would have been distributable among the various
persons in interest, that is, among the various shareholders, in their respective
proportions. But under the circumstances revealed in this case, it was erroneous to give
judgment in favor of the plaintiff for his aliquot part of the par value of said shares. It is

elementary that one partner, suing alone, cannot recover of the managing partner the
value of such partner's individual interest; and a liquidation of the business is an essential
prerequisite.
Moreover, after the death of the original defendant, Lim Ka Yam, the trial court allowed
the action to proceed against Lim Yock Tock, as his administrator, and entered judgment
for a sum of money against said administrator as the accounting party. This is an error
because it is well settled that when a member of a mercantile partnership dies, the duty
of liquidating its affair devolves upon the surviving member, or members, of the firm, not
upon the legal representative of the deceased partner.
The judgment must be reversed, and the defendant will be absolved from the complaint.